Cost Price refers to the amount of money that a business spends to acquire a product or service. This includes the purchase price, shipping fees, and any additional costs necessary to make the item ready for sale. Understanding the cost price is essential for businesses to determine their pricing strategies and ensure profitability. When a business sells a product, the difference between the selling price and the cost price is known as the profit. If the selling price is higher than the cost price, the business makes a profit; if it is lower, the business incurs a loss.